On Good Morning America, Connecticut Gov. Ned Lamont announced that the state will cancel medical debt for eligible residents, becoming the first US state to do so. It concerns approximately 1 billion dollars to be erased by leveraging $6.5 million in American Rescue Plan Act funds.
“This is not something they did where they were spending too much money. This is because they got hit with a medical emergency, and they should not have to suffer twice: first for the illness, then with the debt”, Gov. Lamont said. “The best way to start building health of your own is eliminate the debt you’ve got. We’re making that easier for people to do”, Connecticut Gov. concluded.
According to the State, more than 1 in 10 Connecticut residents have medical debt, but only around 250,000 residents are eligible for this plan. Those whose household income is up to 400% of the federal poverty line (for a family of four, it’s $124,800 annually) or whose medical debt equals 5% or more of their annual income are entitled to ask for this benefit. They don’t even have to apply because the contracted agency will work automatically with the state agency, which has yet to find a non-profit organization to help with the process–to erase their medical debt.
Those who have their debt canceled will also not have any associated tax burden, as the IRS doesn’t count medical debt erased via non-profit as taxable income, the State said.
This plan is going to go into effect by June, according to Gov. Lamont.
